- Apple Inc. (NASDAQ: AAPL) recently announced its earnings report and revealed that it will be spending an additional $50 billion in buybacks and a dividend increase
Apple Inc. (NASDAQ: AAPL) recently announced its earnings report and the company declined to give a financial forecast due to the coronavirus pandemic. And Apple Inc. (NASDAQ: AAPL) also revealed it will be spending an additional $50 billion in buybacks and a dividend increase. However, the $50 billion is a smaller increase than the $100 billion and $75 billion added to the program in 2018 and 2019, respectively.
For the March quarter, Apple topped the earnings and revenue expectations, largely due to its services division. For the fiscal second quarter, Apple saw its net income hit $11.25 billion ($2.55 per share) — which is down from $11.56 billion ($2.46 a share) one year earlier. Analysts were expecting less than $2.25 a share. And Apple’s total revenue hit $58.31 billion from $58.02 billion a year earlier.
There were supply and demand issues in China during the month of February and then those issues became global in March. But Cook said that production was back at the typical levels as of the end of March. Cook acknowledged that foot traffic to stores is up from February, but it is not back to the levels from before when the lockdown started.
Revenue from the iPhone dropped compared to a year earlier. And Apple Inc. (NASDAQ: AAPL) CFO told investors to expect worse year-over-year sales performance in the June quarter.
Specifically, the iPhone sales dropped to $28.96 billion from $31.05 billion a year earlier. However, the new iPhone SE has seen “strong customer response.”
The revenue from wearables, accessories, and other products increased to $6.28 billion from $5.13 billion. But Maestri said that there will likely be worse year-over-year performance in that segment also. However, the year-over-year trends for the iPad and Mac could improve.
iPad revenue dropped from $4.87 billion to $4.37 billion. And Macs generated $5.35 billion in sales, down from $5.51 billion a year earlier.
The services segment hit $13.35 billion in revenue, up from $11.45 billion a year earlier. For the June quarter, revenue from Apple Music, Apple App Store, Apple iCloud, and Apple TV+ are expected to continue stronger performance. But Apple Care and revenue from ads are expected to fall.
Morgan Stanley lead analyst Katy Huberty is retaining Apple as a top pick due to the longer-term prospects, according to AppleInsider.com. The investment bank is expecting sustained growth in Services along with strong demand for 5G iPhone upgrade cycles for driving revenues in 2021.
“Net, we raise our Mac iPad and Wearables forecast, lower Services growth, and keep our iPhone estimates relatively unchanged,” wrote Huberty in a letter obtained by AppleInsider.com.
So Morgan Stanley raised its 12-month price target to $326, up from $298. This is based on an enterprise value-to-sales (EV/Sales) multiple of 3.7x on Apple’s iPhone, iPad and Mac business; a 3.8x EV/sales multiple on wearable, home, and accessories; and a 7.1x EV/sales multiple on Services. And this results in a 4.4x target EV/sales multiple and a 21.8x price-to-earnings multiple for the 2021 fiscal year.
Disclosure: I own a small number of Apple shares
